The Current Macroeconomic Situation, Essay Example

In the United States, current macroeconomic conditions are complex and challenging on many levels. They represent a myriad of different influences and other factors that impact many different areas, including the financial conditions of the lower and middle classes. Some of these factors must be examined more closely because they have a significant impact on income generation and livelihood for many Americans. Furthermore, company-based data is also critical in order to determine if organizational performance is on target with the desired expectations. Most importantly, the current set of economic circumstances must be explored further in order to obtain a clearer picture of the United States from an economic perspective.

In 2014, the United States economy began to gradually improve on the heels of lower jobless claims, improved payroll statistics, and expanded manufacturing, in spite of reduced GDP (Hatzius, 2014). Furthermore, the housing market has been relatively weak, due to factors such as student loan debt, which is requiring many young prospective homebuyers to remain with their parents or to rent rather than to purchase homes (Hatzius, 2014). In general, current U.S. fiscal policy is in turmoil due to a substantial political divide, along with excessive government spending, a broken infrastructure, and a reduced competitive advantage, due to the low value of the U.S. dollar and the emergence of super economies in other parts of the world (Vietor&Weinzierl, 2014). In addition, the United States taxation system requires significant reform and until this occurs, continues to limit some forms of investment due to high tax brackets for some residents and companies and excessive tax breaks for others (Vietor&Weinzierl, 2014).

Although the Federal Reserve continues to maintain lower interest rates, inflation in the United States is on the rise and affects some areas more significantly than others, such as the cost of renting residences or property (Johnson &Worah, 2014). At the same time, inflation rates associated with food and energy have gradually declined in the wake of such factors as lower agricultural prices and an increase in oil production in the United States, respectively (Johnson &Worah, 2014). Nonetheless, tensions that continue to persist in the Middle East may pose a threat to oil production and subsequent pricing, thereby increasing the rate at the pump over time (Johnson &Worah, 2014).

This week, Wall Street experienced one of its most tumultuous weeks in recent history, which may be attributed to a complex and diverse global economic picture that is challenged by chaotic conditions in many countries and stagnant growth (Irwin &Eavis, 2014). It is entirely possible that the United States may suffer a setback as a result of its current fiscal policies regarding the prevention of high inflation rates and budget deficits, and this strategy may backfire in the very near future (Irwin &Eavis, 2014). These factors represent an opportunity to examine how global monetary policy and current trends impact the United States in different ways and how these practices facilitate new decisions for the nation’s policy makers and economists (Irwin &Eavis, 2014). The nature of global conditions must be considered; however, domestic policies play a significant role in determining how the United States responds to economic conditions that will impact their economic future over the long term (Irwin &Eavis, 2014).

Perhaps most important to the current macroeconomic situation the United States is consistency in economic activity at the business level, thereby increasing the need to develop strategies that will support the continued growth of consumer spending, an expanded level of manufacturing, an increase in jobs and income levels, reduced or at least steady unemployment levels, and greater stability in federal spending, all of which are likely to have a positive impact on the U.S. economy in the coming months and years. These issues must be considered as part of a larger framework to examine the issues related to fiscal and monetary policy, as well as tax reform, all of which will also likely contribute to favorable conditions with the U.S. economy.

References

Hatzius, J. (2014). Economic outlook: United States. Retrieved from http://www.goldmansachs.com/our-thinking/outlook/jan-hatzius-economic-outlook-us-mid-yr-2014.html

Irwin, N., &Eavis, P. (2014). Wall Street’s whipsaw week shows global economy’s flaws. The New York Times, retrieved from http://www.nytimes.com/2014/10/11/upshot/wall-streets-whipsaw-week-shows-global-economys-flaws.html?_r=0&abt=0002&abg=1

Johnson, N.J., &Worah, M.P. (2014). U.S. inflation outlook 2014: signs of life. Retrieved From http://www.pimco.com/en/insights/pages/us-inflation-outlook-2014-signs-of-life.aspx

Vietor, RHK, &Weinzierl, M.C. (2014). Macroeconomic policy and U.S. competitiveness. Retrieved from http://www.hbs.edu/competitiveness/pdf/USComp-VietorWeinzierl-WorkingPaper.pdf